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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today show, we'll discuss what's next for the markets amid some signs that the American labour market may be weakening. Peter Hodson from 5i research is our guest. And staying with jobs, Moneytalk's Anthony Okolie is going to give us a preview of what to expect for this week's US nonfarm payrolls report.
And in today's a big education segment, Nugwa Haruna is going to show us how you can research companies by their market capitalization using the platform. So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
before we get our guest of the day, let's get you an update on the market.
There further scions that the US labour market appears to be weakening after a year of aggressive rate hikes which was sort of the point of the whole thing. The market has decided to take this as a bit of down news.
Right now on Bay Street with the TSX Composite Index, triple digit loss of 109 points, a little more than half a percent. We have also seen a pause in the rally and the crude prices, pretty dramatic coming off the surprise production cut from OPEC over the weekend.
You're still above 80 bucks per barrel, the American benchmark, but a bit of a calming and that space in some of the energy names giving back modestly today.
A bit of risk coming off the table when it comes to tech most definitely on the side of the border.
We will show you Shopify at 6207, down about two bucks per share, a little more than 3%.
Some of the mining name still getting a bid in this environment, including Lundin.
right now it is up 3 1/2% per share. South of the border, we do have the S&P 500 in negative territoryand the NASDAQ. The broader read of the market is nothing too dramatic, down 17 points, just 5/2 a percent. A little more solid pressure in the tech names as evidenced by the tech heavy NASDAQ, right now down 1 1/3%. That includes some of the big chipmakersthat have done well recently but getting back so that today. Got Nvidia down almost 3%.
And that's your market update.
Despite fears about inflation, rates and the health of global banks, the S&P 500 is still in positive territory for the year.
But as you begin to see some signs of weakness in the US labour market, our some investors a little too focused on the end of rate hikes potentially and not enough on the risks of a recession?
Joining us now to discuss is Peter Hodson, founder and head of research at 5i research.
Peter, great to have you back on the show.
>> Thank you.
> Let's talk about it. Got a whole mix of things here, no shortage of things to worry about, and I find it interesting that as we waited for the labour market to cool, we are finally getting the signs… The market is trying to read all of this, what is it actually mean?
>> It's one of the scenarios were bad news is good news and good news is bad news.
The market has been very worried about the labour market and labour pressure so to see some of the labourstrength come off will be a positive sign and, of course, if companies don't hire people, then their profit margins actually can improve assuming their revenues are not falling apart as well.
So it's a little bit of good, a little bit about.
You got a situation where investors are concerned about this looming recession.
Yet, we are not there yet.
And yet, the market is sort of valuing it as though we were already in recession.
If you compared to 08, we were losing 400,000 jobs per month and we are still creating jobs in the US. So we are not quiet in crisis mode but investors are preparing for crisis. That's what it seems like to us.
>> As this unfolds, this is what the Fed has been watching in terms of trying to control inflation and our central bank, the Bank of Canada, they weren't so long that there would bepain in the economy, pain in the labour market if we were going to tame those price pressures.
The soft landing, the hard landing, where does this take us?
>> I think we will probably do soft.
Really, the corporate balance sheets, and we won't talk about some of the problems in the US in certain regions and sectors, but on average, corporate balance sheets are in really good shape compared to past cycles.
automation is helping productivity. Got a situation where the labour market, even though it is slightly weaker this month compared to last month, there is still a jobout there if you want one.
I think we are going to be okay and the market is sort of worried a little too much about a hard landing. And honestly, most recessions last less than a year.
And they are priced in ahead of time in the stock markets.
So you're really looking at maybe a six month window if you want to exit and then come back in. And that might work once or twice.
>> Timing the market gets awful hard.
>> Is not going to work consistently. If you have a dividend stock that keeps paying you money, you have a company that still making money, you don't really have to worry that much about what's happening.
This is just a regular economic cycle. Things are strong, they hike rates, slow things down and carry on.
>> Let's talk a little bit about the labour market because well has been resilient through all this, you do you will get, they had a lot of headlines. I'm thinking about the tech community in the states, big numbers, 7000, 9000, 10,000 jobs being trimmed at these behemoth tech companies.
Had we put that in context with the overall labour market?
>> First off, you have to wonder what these people were doing if you can fire 10,000 people in one day.
A lot of it is coming from COVID. COVID in the tech world, the demand searched and people were just scrambling to try to fill demand because everything changed in the pandemic and they went on a massive hiring spree on anticipation of that trend continuing.
and then when things got back to normal little bit, it was like, hey, we don't need another 5000 engineers to build the sap.
there was a lot of that going on in this is really interesting because whenever a tech company announces a layoff, their stock usually goes up because, again, it's all about profit margins and if you can save 10,000 people making very high salaries, these engineers, your margins are going to improved medically.
So what is good for the headlines, it's good for psychology, but let's be fair. Most of these people to get laid off from a tech company, they are going to find another job pretty soon, pretty fast. There is still a shortage of talent out there.
>> No we mention off the top that despite all the things we have to worry about, the SP500 is still in positive territory for the year. But if you look at it year to date, it's been a pretty choppy ride. Should we expect that kind of volatility going forward as we sort of settle out all of our fears and try to find a path forward?
>> I think so if you look at the Vic's volatility Index, it's back below 20 and it was spiking above 30 not that long ago so I think people are, it's more of a common year and people have accepted the fact that rates have risen. They have accepted the fact that inflation is higher than what everybody wanted to be.
But now they are used to that and so I think that the next part of the market will be what happens next.
Do we enter a recession?
Is it deep?
Is it shallow? Do we get another problem?
Do we get an oil shock like we had just the other day?
And so it's a situation where I think the inflation interest rate scenario, that's going to be old news.
It's going to be priced in and the market will look at the next crisis.
>> For a while, for a long while, it felt like what the Fed was telling us about the path of rates, with the bond market was actually pricing and were pretty widely divergent.
I feel it was there a brief week maybe at the beginning of the year when they came together before they diverged again?
>> They read for 10 days in the bond market is pricing and lower rates by the end of this year.
I think that would be a little too aggressive in terms of easing.
The Fed is going to make sure that inflation is under control and the job market is under control before they do any sort of easing.
But I think they are on a path to seeing peak rates, we might get one or two more hikes, and then we might flatline for a period of time.
And again, it's all about uncertainty in the market.
If the investor thinks that we are out of the rate hike cycle, then you can plan for that. You can do some modelling.
The analysts can sort of predict cash flows and becomes a little bit more of a normal market where last year was just one inflation number and it really didn't matter if your company was good or bad or you made money or not, it was all about those numbers.
So now we are getting back to fundamentals and it's much easier as an analyst look at a company these days because you're not going to get blindsided by something.
>> We've got another earnings season right around the corner.
We have one behind us.
I think heading into these earning seasons, given the heightened volatility of the concerns we have, this is going to be the one where they come out with the tough medicine they tell us, did we actually see that from corporate America?
As we didn't. We were really expecting kind of a kitchen sink outlook basically.
Companies, everybody looking at the stock was aware of what's happening in the economy and it was such an easy quarter for them to say, you know why?
We are going to be conservative, it's going to be a tough year, is going to be a tough quarter, we are going to take this right down, we are going to fire these people.
That didn't happen nearly to the extent that we thought.
So there are two things that can happen from that.
Either corporations have no idea what's going on in their business, or things are better than what they saw it.
And I think it's the latter.
You are seeing inventory get drawn down, especially in the tech world.
A lot of the tax semiconductor inventories going down and profit margins are holding up and so we have seen quite a few companies guide up. So if you are guiding up when everybody is worried about a recession, that's a pretty positive statement of confidence in that particular companies about the we are looking for right now.
>> What will you be looking at for the next earnings season?
Is there any sign perhaps we were too optimistic in the previous one?
>> You have to guide and then it meets, you have to meet those expectations. I think the one thing to look out for is actually going to be interest costs.
there are a lot of companies that have a lot of debt and some have hedged it and some have not and so I think you're gonna see a big divergence in companies that have manage the interest rate cycle well and those that were caught offside and are suddenly getting absolutely squeezed because their interest costs have doubled in the past year.
That's okay if your regular business is growing and you can sort of offset it with growth, but if you're not growing, that's going to be a problem.
>>many things to watch as we approach another earnings season and the next couple of weeks. We are what you get your questions about North American stocks for Peter Hodson in just a moment time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
The average price of a Toronto home continued to edge higher in March coming in at $1.1 million.
While prices and sales are still far below year ago levels, new listings are down 44% which suggests a tighter market.
Toronto Regional Real Estate Board suggests record immigration level should support demand in the months ahead.
Ruth says a competitive retail environment added to margin pressures in his most recent quarter.
Net income was down 20% year-over-year on an 8% slide in total sales.
Routes cited higher promotional activity across the industry and what it calls a temporary increase in its own inventory levels.
FedEx says it's going to combine his delivery companies into one division. Part of its plan to cut costs by $4 billion by the end of 2025.
The global shipping company says the move will strengthen the operation and increase profits. FedEx also announced a 10% boost to the dividend. We see those shares up modestly to the tune of about 1%. A quick check in on Bay Street and Wall Street.
We will start here at home with the TSX Composite Index.
Right now, we are down 118 points will call that, little more than half a percent. A pause in the rally in crude prices and a pause in the rally and some of the energy names we've seen in recent days.
South of the border, the S&P 500 further digesting more information that perhaps a year of aggressive rate hikes is starting to take some of the steam out of the US labour market even if it's just a little bit.
21 points to the downside right now for the S&P 500, little more than half a percent.
All right, we are back no Peter Hodson. You're taking your questions about stocks, so let's get to them.
Here's an interesting one one of the headlines to start this week. What about the offer from Glencore to Vitec resources, is this good for investors?
>> I think it is good.
it sort of highlights the fact that corporations are looking at stocks differently than investors. So company like Glencore, they are looking at long-term assets they can acquire with tech where those investors are looking at, oh my goodness, there's going to be recession intact. So tech is been an interesting stop for some time.
They decided they wanted to boost value and split the company into two which I think is a pretty good move and then Glencore comes along and says, hey, why don't we buy you will right now. It's really interesting from a timing point of view because tech never gets any overtures when the stock is really, really weak, when they are losing money. They always get approached when the stock is almost at an all-time high. This happened in the last cycle as well when the stock went down to three or four dollars note back up to 4550.
So it is good for investors.
I don't think that this deal as it stands is going to hold up.
Tech is really, you know, they are determined to split the company and it's a share bid instead of a cash bid,they have improved their earnings and margin so I think it would be a shame to see Tackett, great Canadian company, it disappeared to another foreign entity. But the shareholders will speak. If the stock doesn't move and there's good offer and they vote for it, it's gonna go.
But I don't think the current offers going to be successful.
>> When it comes that split of the company, you said it comes at an interesting time for Glencore to try to move into this because TAC has split the coal division off from the other parts of the company.
Once that split is done, what kind of dynamic does that set for the two parts to play in the market?
>> It's very interesting because I think Glencore is interested in both parts but they would also endorse the split, I'm sure. But again, it becomes a smaller entity and the key thing is valuation. I mean, TAC is splitting to improve the valuation of the company.
The fact that there is a bid sort of underscores the fact that the stock was cheap, so they are right on that. So it really depends on what the reception is in the market if we get to the actual split point to see how that changes and what investors do in times of buying more pure play of each side.
But I am not so sure what's going to happen now.
Somebody else may show up and say, this is an opportunity for us to get involved or Glencore could go more. Many, many things can happen when you are in play and when you are splitting the company as well so this was going to be in the media for quite some time.
>> Apart from the specifics of this and Glencore's move, unsolicited and rebuff to bid there, what does it say about the state of global M&A?
You're worried about recession, economic slowdown and then you have a company like Lecours think they want to make a big acquisition.
>> I find it fascinating because it's about time frame.
If you are a global player with a 30, 40, 50 or timeframe, you are not worried about a recession.
You're looking at valuations and you say, what kind of strategic asset can I buy on the cheap when everyone else is worried about recession?
Because this is an asset that Glencore would want to have for the next hundred years and is going to be 10 or 15 recessions and that time so they just price added to the model.
Also, it does show confidence. It also kind of reflect the fact that even though rates have gone up a lot versus the past hundred years, they are really not outrageous in terms of actual rates and also cash flow.
I mean, these companies went into sort of deep kind of housecleaning after the 2008 crisis and know they are and much, much better shape and check in particular, it almost went broke in 2008 and had to get rescued by a Chinese entity and now they are flush with cash, cash is coming in in their balance sheet is much stronger.
So they will sort of smartened up I guess is the right phrase there and they are in better positions now to make deals.
> Look into another question now, this one about CI financial.
A viewer wants to know is CI financial still mutual fund oriented?
Or are there big headwinds for them in an ETF world?
Mutual funds versus ETFs.
>> Yeah, so CI, you can almost draw parallel to tax because their stocks have been undervalued at least as far as they are concerned for quite some time and relative to the sector as well so they have decided that the Canadian market is a little bit too tough.
There are margin pressures on ETFs and their margin pressures on mutual funds which is their bread and butter.
They do a lot of acquisitions.
Actually were to the company they acquired in 2003.
There's not that many companies them to buy anywhere in Canada so they are moving to the US. Most of their deals have been in US asset managers and other ones but the company again, like Tackett, into a US division and a Canadian division.
And we think that's a solid move because we are not sure of the value creation will be as much as it might be with tech because the US market is still very competitive and the margin pressures exist there as well but it's a pretty well run company that hasn't gotten much respect in the past 10 years because of the way the industry has gone. But in terms of execution, they haven't done a lot of things wrong. They are just in an environment where everything is changing very, very rapidly and they have to adapt.
I think the move in the US is good. It remains to be seen whether it's actually going to go through again.
There are always issues with regulatory's and things like that.
But I think the stock has a nice dividend. It has paid dividends for a very long time and it's really, really quite inexpensive versus the rest of the sector.
>> Is that the biggest risk for a name like CI financial, the competitive environment?
>> Yes, there are regulatory changes, the ETFs are just sort of eating mutual funds as lunches these days and there is also the market.
Obviously, an asset manager is tied to capital markets and capital markets aren't doing much, going to have a hard time to grow.
That's been the big problem. They have grown through acquisitions but they haven't done a lot of organic growth and in the old days where money just poured into a star mutual fund manager, those are over and now investors are looking for the lowest-priced option for largely index funds and that's a different game.
>> Another question now coming in. How does your guest feel about the prospects for Lightspeed Commerce?
Another one of our text plays that often gets overshadowed by bigger names.
>> Yeah, it used to be called the next Shopify and the stock went way way up and then they had issues and the stock went way way down.
Now it's only about a $2 billion company and they brought cash on the books and the real problem with Lightspeed was they did some really quite big acquisitions with some really high valuations when things were different and then sold last year at the end of 2022, they took a right down on some of those acquisitions and took a big loss.
The company is in the point-of-sale business for restaurants and hotels so they are very tied to the consumer economy.
It's a decent company that's done a decent job.
It just perhaps was put in a box that it shouldn't have been in and it was called the next superstar Canadian company.
And yes, they have grown and on the right things.
They made a couple of mistakes on the acquisition side but people were just expecting this company to go to $50 billion like Shopify did and it just wasn't the same and now you have to deal with the investor disappointment so it will take a while for this one to get out of the penalty box, I think.
>> It's interesting that you drew the parallel that you don't think about because you put Lightspeed as I did off the beginning and I tech basket which it is firmly but at the same time, its business is retail, hotels, restaurants and then we are talking about names that are very sensitive to the cycle.
>> That's right.
Today, it's funny that during COVID, when you would expect that their business would just completely fall apart, they actually managedthat process very, very well.
They managed to keep growing and took all their restaurants to do delivery and take out and they manage that process but then it was just short of the follow-up to that was where I don't want to say they messed up but I think they… The expectations were just way too high on this company.
>> Interesting stuff.
As always, make sure you do your own research before making any investment decisions.
will get back your questions for Peter Hodson on North American stocks in just a moment's time.
A reminder, of course, that you can contact us at any time.
Just email moneytalklive@td.com.
Now let's get our educational segment of the day.
When researching potential investments, market capitalization is one metric you may want to look at and WebBroker makes it easy to do so.
Joining us now to take us through it is Nugwa Haruna, senior client education instructor with TD Direct Investing. Nugwa, great to see you again.
Let's talk about market cap, what it means and how you figure it out on the platform.
>> It's always a pleasure being here, Greg. When you talk about market capitalization, it gives an idea of what a company is worth to an investor based on the stock market. Itcalculated based on the outstanding number of shares in the company multiplied by whatever the current stock price is.
That means that companies may experience some fluctuation in their market capitalization.
So then investors, if they want to have an understanding of why you would even consider using market capitalization when researching, well he gives investors an idea of the size of companies relative to one another and it also lets investors know based on whatever strategy they are using what companies and may have potential rapid growth potential or those that are more established. So let's go into WebBroker and take a look at different indices that attract different companies based on market capitalization size.
In WebBroker, I'm going to click on research and under market, I'm going to go indices and we will talk about the three main categories of market capitalization. I want to start off with the S&P 500.
This would be the most popular one here. And this one tracks the largest companies that trade on the US exchange and this will track large-cap companies.
In other words, it's tracking companies that are valued at $10 billion or more.
Now going back to… Just going back to indices here, the next market cap category will be mid-cap companies and that will be tracked under the S&P 400.
this attracts companies that are valued between 2 billion and $10 billion, so mid-cap companies.
investors who consider this may consider this because these companies may have the potential for rapid growth in whatever sector they are.
The final category we will look out will be the small-cap and that would be under the S and P 600. So this one tracks companies that are valued between $250 million and $2 billion. Now, this would be utilized by investors who have a more aggressive investing style, may have a longer time frame and that's because even though these companies may have a more aggressive growth potential, there's a lot more volatility involved.
Investors can look at any one of these indices to identify these different companies based on market capitalization side.
> Let's dig deeper now. Say an investor wants to filter through the mid-cap companies based on one specific sector or industry.
How do we go about doing that?
>> That's where the idea of screeners comes back into play. We talk about screeners a lot because it's a very powerful tool. Let's hop into WebBroker and I will show you how an investor because a specific market Size as well as sector may filter and find companies that fit that category. So in WebBroker, we will go research and this time under tools, we are going to go screeners.
So the screener tool allows you to looat different companies under categories that matter to you. Here we are filtering for stocks and we will go to screening here.
LI'm just going to declare the results we have right now and focus on specific criteria.
I will start off by looking at companies trading on a US exchange, so going to change this to US companies and then I'm going to add more criteria and the first option I will choose will be at market capitalization.
So you mentioned, grade, small-cap, or mid-cap, mid-cap companies are typically valued between 2 billion, so I will put my minimum at 2 billion, my maximum at 10 billion and so right then, it shows me that there is over a thousand companies that meet that criteria, still a lot of companies, so I want to add more.
This time, I will filter by sector and may be I want to filter by healthcare.
And so once I do that, the number has reduced significantly, there's 126 companies that I will add one more criteria here because as we mentioned, mid-cap companies may have potential for rapid growth so maybe as an investor you want to figure out what the earnings-per-share has been in the last five years, so let's add that. And in this instance, will say may be companies that have experienced some kind of growth in their earnings-per-share, at so now you're down to 23 companies.
An investor is able to filter through these mid-cap healthcareCompanies that have experiences some growth in earnings-per-share. I will not forget… As you always remind me, an investor can always save their screener so that they always have this available but this is how an investor can actually filter for these companies.
>> I want them to learn from my mistakes, Nugwa, because I've set up some killer screeners, such a great trainer, and then I go away from the page and didn't save it.
So if I can save one person the hassle, it's all worth it.
>> Always a timesaver.
>> Thanks for that, Nugwa.
Nugwa Haruna, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
And our reminder of how you get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
All right, we are back with Peter Hodson, we are taking your questions on with American stocks.
Lots of questions coming in for you, Peter, let's get to them.
What is your look for gold?
>> So we kind of like gold right now and one thing that's interesting to me is that with the sectors and stocks, they are never on your timeframe and so last year when inflation was creeping up, everyone was saying, what's up with gold? Inflation is up so gold should be up.
Gold doesn't care what the timeframe is and so now it's a situation where interest rates are peeking, the US dolomite peak as well, now lo and behold, gold is 2% off its all-time high. So I think the sector is really under own right now. We are really positive in terms of the gold sector.
the scarcity of producers is a factor. So if you get any sort of wave of money chasing the sector when it hits new highs,investors are going to find there are fewer stocks to buy. The names they use to own in the last cycle, some of them don't even exist anymore because they've been taken over so we are pretty positive.
We are not gold bugs, but we just think that once rates peak and the US dollar peaks, culture do better.
>> Gold is about $2000 right now. People are probably asking the question and I'm asking myself too, can gold go much further than this?
You said is only 2% off its all-time highs.
>> I would never call any price on gold because it just acts as its own thing. You don't know what's going to happen in the future and it's always been a good hedge against problems.
If we go back to 2008, it was one of the only assets other than the US dollar that actually went up in value. So a lot of people don't like cool because it is in pay interest, or dividends and it's a pain to store but it's a negative correlator to the market so it can be very useful in a portfolio to diversify, but I just think people have to manage their own exposure. There's a lot of gold bugs that are all in gold and I don't think that's the right approach either.
> Let's go to another question now.
Lots coming in. We talked about Lightspeed.
Let's talk about the big one now.
Please comment on Shopify a near-term growth projection.
This is an interesting one considering what happened during the pandemic and after the pandemic.
>> Yes, and it's an interesting business case.
Shopify did what they needed to do for their long-term business which was to spend money on distribution, warehouses and so on to makesure their company could fulfil their orders like Amazon. It cost a lot of money.
it hurt their earnings. Investors were saying, hey, you're supposed to be this massive growth company and now you're spending this money and it is look so good.
But the proof will be in the pudding five years down the road if they maintain their global leadership position with Amazon and they maintain a duopoly in the non-China world.
We'll see what happens and I think they did the right move because if they didn't, the customers are going to go elsewhere and we know where they would've gone because there was a big competitor.
they're back on track. Investors have realized that this company is still growing, it's still a global player, it still has five or $6 billion in the bank.
And it might've done the right thing even though the medicine was hard to take. So we do like the company.
We like its prospects. Again, you need a better interest rate environment for tech stocks to really, really do well but we may not be far from that depending on what happens with inflation and I think it's one of the go to names for any of the managers in the Canada, is based on the index. People know the name, and when tech runs, people might start looking at it again. It's off its lows and if they can get back intoit ties, that could be interesting.
>> In the long term, perhaps they have set themselves up for success. In the short term, are all the check names getting pushed around by the market, the beds about when the Fed will start cutting?
>> It does. Investors these days are so focused on quarterly results as well so you can get a situation where company misses 1/4 and rates don't go downand investors might lose their heads over that because it won't be a very good scenario for that particular company. But I think again, as we were talking about earlier, things are slowly getting back to a more normalized scenario.
we will never get rid of the quarter to quarter traders, but people will start looking at the big picture and say, yeah, this is a company that may be around for the next 50 years so why am I worried about the next 90 days. That may be good for investors but it's difficult for a lot of people.
> Look at another question now, we have a viewer who wants your views on TC Energy. Another big story in the headlines right now. OPEC's actions and the resulting price action in crude.
>> Poured TC Energy. They have a lot of issues going on. One is that it's a dividend stock and with rates going up, you got GICs that are paying 5% and suddenly dividend stocks may not look as exciting as they used to it when rates were at 0% and the other thing is they are getting hit by inflation on the coastal pipeline and their estimates on the pipeline have gone from 8 billion to 10.9 billion and that's a pretty big jumpfor a project that supposed to be onstream I think it's early next year.
And so investors are saying, okay, well you got cost overruns, you've got potential problems and you got a dividend that is fine but not as fine as it used to be versus everything else and so I think it's going to be just flatlining for a period of time. I think it's a very, very solid company and it's one of the situations where price, it's all about volume. So they don't really worry about gas and oil pricing, just as long as the volume is there.
And despite the green movement and things like that, the pipelines are all full and we are going to have carbon for a long time before we don't have carbon and so I think the timeframe essentially don't have to worry about that but the cost overruns, that's a big fundamental change and investors are going to sit on the sidelines for a longer period of time.
>> Important things to keep in mind for TC Energy.
We'll get back your questions for Peter Hodson on North American stocks in just a moment.
As always, make sure you do your own research before you make any investment decisions and a reminder that you get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker.
Just write in your question and hit send.
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It's one of the big economic data plans we always keep eyes on as investors: US jobs report.
The March report will be coming at the end of this week. Of course, the Fed is looking for signs of a cooling labour market.
What might we get? Anthony Okolie is joining us now with TD Securities Outlook on the job stated. What we think?
>> Thanks very much.
This is a big one. TD Security says that although US payroll growth likely slowed relative to the January February period, TD Securities expects job growth into a stay at a steady pace. While payrolls are down from the record set back in 2021 after the lifting of COVID restrictions, as you can see,the three and six month moving average, the light green line issix months and dark line is three months. Payroll is sitting well above 300,000 by the end of February.
Now TD Securities expects the US to add another 270000 Jobs in March.
That's versus 240,000 consensus estimates.
Again, a slight slowdown from the stronger in January, February prints that we saw earlier this year but it also represents an above trend pays for job growth for the US. The unemployment rate, TD Securities things that is going to stay unchangedat 3.6% and TD Securities is also forecasting wage growth the common at a firm 0.3% month over month gain. Prior to the US jobs print which is coming out this Friday, we did get the jewel job open report in the US which fell below 10,000,004 in February for the first time in nearly 2 years.
Another sign that the US labour market is cooling.
This morning we got the US market payrolls which came in at hundred and 45000 Jobs in March, that is down versus what we saw in February, well below the 210,000 that was estimated by Wall Street, again providing a sign that perhaps the US economy is slowing. Now, one bright spot in the payrolls report was around wage growth which grew at a 6.
9% rate in March.
Again, that's down from the 7.2% we saw in February.
Again, that's a positive sign for the Fed, which is looking to tamp down on inflation ahead of the next meeting in May.
Of course, TD Securities expects the Fed to hike rates 25 basis points followed by another 25 Basis Point Hike in June which would bring the terminal rate to between five and 4:45 .5%. Greg?
>> Anthony, speaking of inflation, which is TD Securities think about that? Not only inflation but the overall health of the US economy.
>> On the economy, they still expect US economic growth to slow down during most of the year the below trend growth as the past Fed rate hikes continue to work their way through the economy, leading to a recession in the fourth quarter. Now to give their expectations for a recession later this year, they expect the Fed to start easing policy by the end of the year. Now, on the inflation front, TD Securities is forecasting inflation to slow to 3 1/2% by the fourth quarter with core CPI decelerating to a still high of 3.
7%.
now they also note that there are some risks to the economic projections for 2023, namely any new developments in the financial markets after the SVP collapse as well is another escalation in the Russian Ukraine conflict.
Greg?
> Interesting stuff as always.
Thanks.
>> My pleasure.
>> Moneytalk's Anthony Okolie.
Let's check in on the markets.
We will strong Bay Street, 112 points to the downside we will call that, a little more than half a percent.
Not really moving all that much during the lunchtime trading session.
We saw that big jump in the price of crude on the back of OPEC surprising us on the weekend with the production cut.
We saw some money move into the energy names.
A bit of a pause in the trade today, not only in benchmark room but some of the energy names that shot up in recent session. 2461 for Cenovus, you're down a modest 1.
8%.
I notice some of the mining names, Hudbay in particular getting a bid, he continues to get a bit.
At six bucks and nine cents per share, it's up a little more than 3 1/2%.
South of the border, we just heard from Anthony, as we look forward to jobs Friday and some indication that perhaps labour softening, what does the Fed do with it all, investors are working through it as well. A bit of a down day but nothing too dramatic, down about 23 points on the S&P 500, a little more than half percent.
On the tech side, there is a bit more weakness, a bit of risk coming out of the trades, 175 points to the downside, the NASDAQ down one and half percent.
The chipmakers are getting it today.
We should you Nvidia off the publisher.
You can't advance micro devices, and deed, down to the tune of about 4%.
We are back note Peter Hodson from 5i research, taking your questions. This one was in the headlines.
What do you think of REI TS right now?
Especially office real estate and was happening with the whole return to work?
> Sure.
It's pretty interesting because we are at a low.
Office vacancies are high.
It's still the COVID work from home is impacting things. But the question is, is if we do get into a recession and you actually get unemployment picking up,then office vacancies are going to be kind of ugly.
And of course, when office vacancies are that high, the rent roll over start. You start getting lower rents if you are signing leases.
I remember the 9192 real estate recession were companies going bankrupt left right and centre, almost on a weekly basis. We had shopping centres going bankrupt, interest rates were much higher. It could get ugly. So it's a situation where right now, investors are scared of what might happen. So the big question is a, does the work from home situation change? And B, do we actually see an uptick in unemployment which could impact office vacancies? I would be relatively cautious right now.
A lot of companies are sort of saying, companies are going to be okay and it looks okay looking at the numbers but itall depends on what happens going for words I would be a bit cautious on that sector right now because if we do get a deeper recession than expected, it's a sector that's going to continue to struggle.
>> Is the work from home versus the return to office the wildcard here? I have heard one theory, people love to spend things in different ways, this is sort of intriguing, saying, when labour was scarce, the market was tied to the people felt, the workers felt they had the power to say, I'm going to sit home. In a recession, I heard that this argument was sort of an intriguing one, it might motivate some people to show their face in the office, they might come back by virtue of their being a recession and times are tough.
>> That's very true. There are a lot of companies saying, you know what?
You can work one day a week from home, not four.
We are seeing that trend in terms of corporate announcements but we are not seeing it in office vacancies.
I think the corporations are still a little bit reluctant to add space because they are looking at the same things you and I are in terms of what could happen, and they are also looking at their future hiring expectations. And if they are worried about what's going to happen, they're not about to hire a thousand people as he talked about, they're laying off 10,000 people.
They are just not signing those seals.
So I think the trend towards getting back in the office will continue but it may not be enough to kind of override the trend that's happening right there.
>> For the viewer at home, we are clearly in an office tower right now, unless I thought maybe I had built this in my basement which would be impressive, but no, I have a TV at home. Nothing this impressive. We are at a time for question. We always love having you on the show. Any final thoughts in terms of volatility we have seen so far this year and when we might be able to sit back and look at the fundamentals and not worry about macros so much?
>> Yeah, I think once the Fed stops, when they do nothing, they have a meeting where they don't raise, they don't lower, that will be significant for investors.
I think first quarter earnings are going to be important and I think really investors need to remember it's a long term journey.
You're not buying this for this year.
If you are investing in stocks, you should have a longer-term timeframe then this year.
But unfortunately, the average holding time I think is nine months now with the stock.
We just find that ridiculous.
It should be 10 years as far as we are concerned.
You have to have that money compounding for you over time. You have to go through the recessions to end a positive at the end of the day.
I think everyone just needs to sit back and chillax a little bit.
[both laughing] >> Interesting times and always interesting to have a conversation with you.
>> Thank you.
>> Is always a home, do your own research before making an investment decision. Our thanks to Peter Hodson, founder and head of research at 5i Research, he has been our guest. We will be back tomorrow with the reaction to the Canadian Jobs Report as well some of our best interviews of the week. On Monday, Jim Kelleher, director of research at Argus Research will be our guest taking your questions about technology stocks. A reminder that you can get a head start this question, just email moneytalklive@td.com. That's all the time we have the show today. Thanks watching. We'll see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today show, we'll discuss what's next for the markets amid some signs that the American labour market may be weakening. Peter Hodson from 5i research is our guest. And staying with jobs, Moneytalk's Anthony Okolie is going to give us a preview of what to expect for this week's US nonfarm payrolls report.
And in today's a big education segment, Nugwa Haruna is going to show us how you can research companies by their market capitalization using the platform. So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
before we get our guest of the day, let's get you an update on the market.
There further scions that the US labour market appears to be weakening after a year of aggressive rate hikes which was sort of the point of the whole thing. The market has decided to take this as a bit of down news.
Right now on Bay Street with the TSX Composite Index, triple digit loss of 109 points, a little more than half a percent. We have also seen a pause in the rally and the crude prices, pretty dramatic coming off the surprise production cut from OPEC over the weekend.
You're still above 80 bucks per barrel, the American benchmark, but a bit of a calming and that space in some of the energy names giving back modestly today.
A bit of risk coming off the table when it comes to tech most definitely on the side of the border.
We will show you Shopify at 6207, down about two bucks per share, a little more than 3%.
Some of the mining name still getting a bid in this environment, including Lundin.
right now it is up 3 1/2% per share. South of the border, we do have the S&P 500 in negative territoryand the NASDAQ. The broader read of the market is nothing too dramatic, down 17 points, just 5/2 a percent. A little more solid pressure in the tech names as evidenced by the tech heavy NASDAQ, right now down 1 1/3%. That includes some of the big chipmakersthat have done well recently but getting back so that today. Got Nvidia down almost 3%.
And that's your market update.
Despite fears about inflation, rates and the health of global banks, the S&P 500 is still in positive territory for the year.
But as you begin to see some signs of weakness in the US labour market, our some investors a little too focused on the end of rate hikes potentially and not enough on the risks of a recession?
Joining us now to discuss is Peter Hodson, founder and head of research at 5i research.
Peter, great to have you back on the show.
>> Thank you.
> Let's talk about it. Got a whole mix of things here, no shortage of things to worry about, and I find it interesting that as we waited for the labour market to cool, we are finally getting the signs… The market is trying to read all of this, what is it actually mean?
>> It's one of the scenarios were bad news is good news and good news is bad news.
The market has been very worried about the labour market and labour pressure so to see some of the labourstrength come off will be a positive sign and, of course, if companies don't hire people, then their profit margins actually can improve assuming their revenues are not falling apart as well.
So it's a little bit of good, a little bit about.
You got a situation where investors are concerned about this looming recession.
Yet, we are not there yet.
And yet, the market is sort of valuing it as though we were already in recession.
If you compared to 08, we were losing 400,000 jobs per month and we are still creating jobs in the US. So we are not quiet in crisis mode but investors are preparing for crisis. That's what it seems like to us.
>> As this unfolds, this is what the Fed has been watching in terms of trying to control inflation and our central bank, the Bank of Canada, they weren't so long that there would bepain in the economy, pain in the labour market if we were going to tame those price pressures.
The soft landing, the hard landing, where does this take us?
>> I think we will probably do soft.
Really, the corporate balance sheets, and we won't talk about some of the problems in the US in certain regions and sectors, but on average, corporate balance sheets are in really good shape compared to past cycles.
automation is helping productivity. Got a situation where the labour market, even though it is slightly weaker this month compared to last month, there is still a jobout there if you want one.
I think we are going to be okay and the market is sort of worried a little too much about a hard landing. And honestly, most recessions last less than a year.
And they are priced in ahead of time in the stock markets.
So you're really looking at maybe a six month window if you want to exit and then come back in. And that might work once or twice.
>> Timing the market gets awful hard.
>> Is not going to work consistently. If you have a dividend stock that keeps paying you money, you have a company that still making money, you don't really have to worry that much about what's happening.
This is just a regular economic cycle. Things are strong, they hike rates, slow things down and carry on.
>> Let's talk a little bit about the labour market because well has been resilient through all this, you do you will get, they had a lot of headlines. I'm thinking about the tech community in the states, big numbers, 7000, 9000, 10,000 jobs being trimmed at these behemoth tech companies.
Had we put that in context with the overall labour market?
>> First off, you have to wonder what these people were doing if you can fire 10,000 people in one day.
A lot of it is coming from COVID. COVID in the tech world, the demand searched and people were just scrambling to try to fill demand because everything changed in the pandemic and they went on a massive hiring spree on anticipation of that trend continuing.
and then when things got back to normal little bit, it was like, hey, we don't need another 5000 engineers to build the sap.
there was a lot of that going on in this is really interesting because whenever a tech company announces a layoff, their stock usually goes up because, again, it's all about profit margins and if you can save 10,000 people making very high salaries, these engineers, your margins are going to improved medically.
So what is good for the headlines, it's good for psychology, but let's be fair. Most of these people to get laid off from a tech company, they are going to find another job pretty soon, pretty fast. There is still a shortage of talent out there.
>> No we mention off the top that despite all the things we have to worry about, the SP500 is still in positive territory for the year. But if you look at it year to date, it's been a pretty choppy ride. Should we expect that kind of volatility going forward as we sort of settle out all of our fears and try to find a path forward?
>> I think so if you look at the Vic's volatility Index, it's back below 20 and it was spiking above 30 not that long ago so I think people are, it's more of a common year and people have accepted the fact that rates have risen. They have accepted the fact that inflation is higher than what everybody wanted to be.
But now they are used to that and so I think that the next part of the market will be what happens next.
Do we enter a recession?
Is it deep?
Is it shallow? Do we get another problem?
Do we get an oil shock like we had just the other day?
And so it's a situation where I think the inflation interest rate scenario, that's going to be old news.
It's going to be priced in and the market will look at the next crisis.
>> For a while, for a long while, it felt like what the Fed was telling us about the path of rates, with the bond market was actually pricing and were pretty widely divergent.
I feel it was there a brief week maybe at the beginning of the year when they came together before they diverged again?
>> They read for 10 days in the bond market is pricing and lower rates by the end of this year.
I think that would be a little too aggressive in terms of easing.
The Fed is going to make sure that inflation is under control and the job market is under control before they do any sort of easing.
But I think they are on a path to seeing peak rates, we might get one or two more hikes, and then we might flatline for a period of time.
And again, it's all about uncertainty in the market.
If the investor thinks that we are out of the rate hike cycle, then you can plan for that. You can do some modelling.
The analysts can sort of predict cash flows and becomes a little bit more of a normal market where last year was just one inflation number and it really didn't matter if your company was good or bad or you made money or not, it was all about those numbers.
So now we are getting back to fundamentals and it's much easier as an analyst look at a company these days because you're not going to get blindsided by something.
>> We've got another earnings season right around the corner.
We have one behind us.
I think heading into these earning seasons, given the heightened volatility of the concerns we have, this is going to be the one where they come out with the tough medicine they tell us, did we actually see that from corporate America?
As we didn't. We were really expecting kind of a kitchen sink outlook basically.
Companies, everybody looking at the stock was aware of what's happening in the economy and it was such an easy quarter for them to say, you know why?
We are going to be conservative, it's going to be a tough year, is going to be a tough quarter, we are going to take this right down, we are going to fire these people.
That didn't happen nearly to the extent that we thought.
So there are two things that can happen from that.
Either corporations have no idea what's going on in their business, or things are better than what they saw it.
And I think it's the latter.
You are seeing inventory get drawn down, especially in the tech world.
A lot of the tax semiconductor inventories going down and profit margins are holding up and so we have seen quite a few companies guide up. So if you are guiding up when everybody is worried about a recession, that's a pretty positive statement of confidence in that particular companies about the we are looking for right now.
>> What will you be looking at for the next earnings season?
Is there any sign perhaps we were too optimistic in the previous one?
>> You have to guide and then it meets, you have to meet those expectations. I think the one thing to look out for is actually going to be interest costs.
there are a lot of companies that have a lot of debt and some have hedged it and some have not and so I think you're gonna see a big divergence in companies that have manage the interest rate cycle well and those that were caught offside and are suddenly getting absolutely squeezed because their interest costs have doubled in the past year.
That's okay if your regular business is growing and you can sort of offset it with growth, but if you're not growing, that's going to be a problem.
>>many things to watch as we approach another earnings season and the next couple of weeks. We are what you get your questions about North American stocks for Peter Hodson in just a moment time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
The average price of a Toronto home continued to edge higher in March coming in at $1.1 million.
While prices and sales are still far below year ago levels, new listings are down 44% which suggests a tighter market.
Toronto Regional Real Estate Board suggests record immigration level should support demand in the months ahead.
Ruth says a competitive retail environment added to margin pressures in his most recent quarter.
Net income was down 20% year-over-year on an 8% slide in total sales.
Routes cited higher promotional activity across the industry and what it calls a temporary increase in its own inventory levels.
FedEx says it's going to combine his delivery companies into one division. Part of its plan to cut costs by $4 billion by the end of 2025.
The global shipping company says the move will strengthen the operation and increase profits. FedEx also announced a 10% boost to the dividend. We see those shares up modestly to the tune of about 1%. A quick check in on Bay Street and Wall Street.
We will start here at home with the TSX Composite Index.
Right now, we are down 118 points will call that, little more than half a percent. A pause in the rally in crude prices and a pause in the rally and some of the energy names we've seen in recent days.
South of the border, the S&P 500 further digesting more information that perhaps a year of aggressive rate hikes is starting to take some of the steam out of the US labour market even if it's just a little bit.
21 points to the downside right now for the S&P 500, little more than half a percent.
All right, we are back no Peter Hodson. You're taking your questions about stocks, so let's get to them.
Here's an interesting one one of the headlines to start this week. What about the offer from Glencore to Vitec resources, is this good for investors?
>> I think it is good.
it sort of highlights the fact that corporations are looking at stocks differently than investors. So company like Glencore, they are looking at long-term assets they can acquire with tech where those investors are looking at, oh my goodness, there's going to be recession intact. So tech is been an interesting stop for some time.
They decided they wanted to boost value and split the company into two which I think is a pretty good move and then Glencore comes along and says, hey, why don't we buy you will right now. It's really interesting from a timing point of view because tech never gets any overtures when the stock is really, really weak, when they are losing money. They always get approached when the stock is almost at an all-time high. This happened in the last cycle as well when the stock went down to three or four dollars note back up to 4550.
So it is good for investors.
I don't think that this deal as it stands is going to hold up.
Tech is really, you know, they are determined to split the company and it's a share bid instead of a cash bid,they have improved their earnings and margin so I think it would be a shame to see Tackett, great Canadian company, it disappeared to another foreign entity. But the shareholders will speak. If the stock doesn't move and there's good offer and they vote for it, it's gonna go.
But I don't think the current offers going to be successful.
>> When it comes that split of the company, you said it comes at an interesting time for Glencore to try to move into this because TAC has split the coal division off from the other parts of the company.
Once that split is done, what kind of dynamic does that set for the two parts to play in the market?
>> It's very interesting because I think Glencore is interested in both parts but they would also endorse the split, I'm sure. But again, it becomes a smaller entity and the key thing is valuation. I mean, TAC is splitting to improve the valuation of the company.
The fact that there is a bid sort of underscores the fact that the stock was cheap, so they are right on that. So it really depends on what the reception is in the market if we get to the actual split point to see how that changes and what investors do in times of buying more pure play of each side.
But I am not so sure what's going to happen now.
Somebody else may show up and say, this is an opportunity for us to get involved or Glencore could go more. Many, many things can happen when you are in play and when you are splitting the company as well so this was going to be in the media for quite some time.
>> Apart from the specifics of this and Glencore's move, unsolicited and rebuff to bid there, what does it say about the state of global M&A?
You're worried about recession, economic slowdown and then you have a company like Lecours think they want to make a big acquisition.
>> I find it fascinating because it's about time frame.
If you are a global player with a 30, 40, 50 or timeframe, you are not worried about a recession.
You're looking at valuations and you say, what kind of strategic asset can I buy on the cheap when everyone else is worried about recession?
Because this is an asset that Glencore would want to have for the next hundred years and is going to be 10 or 15 recessions and that time so they just price added to the model.
Also, it does show confidence. It also kind of reflect the fact that even though rates have gone up a lot versus the past hundred years, they are really not outrageous in terms of actual rates and also cash flow.
I mean, these companies went into sort of deep kind of housecleaning after the 2008 crisis and know they are and much, much better shape and check in particular, it almost went broke in 2008 and had to get rescued by a Chinese entity and now they are flush with cash, cash is coming in in their balance sheet is much stronger.
So they will sort of smartened up I guess is the right phrase there and they are in better positions now to make deals.
> Look into another question now, this one about CI financial.
A viewer wants to know is CI financial still mutual fund oriented?
Or are there big headwinds for them in an ETF world?
Mutual funds versus ETFs.
>> Yeah, so CI, you can almost draw parallel to tax because their stocks have been undervalued at least as far as they are concerned for quite some time and relative to the sector as well so they have decided that the Canadian market is a little bit too tough.
There are margin pressures on ETFs and their margin pressures on mutual funds which is their bread and butter.
They do a lot of acquisitions.
Actually were to the company they acquired in 2003.
There's not that many companies them to buy anywhere in Canada so they are moving to the US. Most of their deals have been in US asset managers and other ones but the company again, like Tackett, into a US division and a Canadian division.
And we think that's a solid move because we are not sure of the value creation will be as much as it might be with tech because the US market is still very competitive and the margin pressures exist there as well but it's a pretty well run company that hasn't gotten much respect in the past 10 years because of the way the industry has gone. But in terms of execution, they haven't done a lot of things wrong. They are just in an environment where everything is changing very, very rapidly and they have to adapt.
I think the move in the US is good. It remains to be seen whether it's actually going to go through again.
There are always issues with regulatory's and things like that.
But I think the stock has a nice dividend. It has paid dividends for a very long time and it's really, really quite inexpensive versus the rest of the sector.
>> Is that the biggest risk for a name like CI financial, the competitive environment?
>> Yes, there are regulatory changes, the ETFs are just sort of eating mutual funds as lunches these days and there is also the market.
Obviously, an asset manager is tied to capital markets and capital markets aren't doing much, going to have a hard time to grow.
That's been the big problem. They have grown through acquisitions but they haven't done a lot of organic growth and in the old days where money just poured into a star mutual fund manager, those are over and now investors are looking for the lowest-priced option for largely index funds and that's a different game.
>> Another question now coming in. How does your guest feel about the prospects for Lightspeed Commerce?
Another one of our text plays that often gets overshadowed by bigger names.
>> Yeah, it used to be called the next Shopify and the stock went way way up and then they had issues and the stock went way way down.
Now it's only about a $2 billion company and they brought cash on the books and the real problem with Lightspeed was they did some really quite big acquisitions with some really high valuations when things were different and then sold last year at the end of 2022, they took a right down on some of those acquisitions and took a big loss.
The company is in the point-of-sale business for restaurants and hotels so they are very tied to the consumer economy.
It's a decent company that's done a decent job.
It just perhaps was put in a box that it shouldn't have been in and it was called the next superstar Canadian company.
And yes, they have grown and on the right things.
They made a couple of mistakes on the acquisition side but people were just expecting this company to go to $50 billion like Shopify did and it just wasn't the same and now you have to deal with the investor disappointment so it will take a while for this one to get out of the penalty box, I think.
>> It's interesting that you drew the parallel that you don't think about because you put Lightspeed as I did off the beginning and I tech basket which it is firmly but at the same time, its business is retail, hotels, restaurants and then we are talking about names that are very sensitive to the cycle.
>> That's right.
Today, it's funny that during COVID, when you would expect that their business would just completely fall apart, they actually managedthat process very, very well.
They managed to keep growing and took all their restaurants to do delivery and take out and they manage that process but then it was just short of the follow-up to that was where I don't want to say they messed up but I think they… The expectations were just way too high on this company.
>> Interesting stuff.
As always, make sure you do your own research before making any investment decisions.
will get back your questions for Peter Hodson on North American stocks in just a moment's time.
A reminder, of course, that you can contact us at any time.
Just email moneytalklive@td.com.
Now let's get our educational segment of the day.
When researching potential investments, market capitalization is one metric you may want to look at and WebBroker makes it easy to do so.
Joining us now to take us through it is Nugwa Haruna, senior client education instructor with TD Direct Investing. Nugwa, great to see you again.
Let's talk about market cap, what it means and how you figure it out on the platform.
>> It's always a pleasure being here, Greg. When you talk about market capitalization, it gives an idea of what a company is worth to an investor based on the stock market. Itcalculated based on the outstanding number of shares in the company multiplied by whatever the current stock price is.
That means that companies may experience some fluctuation in their market capitalization.
So then investors, if they want to have an understanding of why you would even consider using market capitalization when researching, well he gives investors an idea of the size of companies relative to one another and it also lets investors know based on whatever strategy they are using what companies and may have potential rapid growth potential or those that are more established. So let's go into WebBroker and take a look at different indices that attract different companies based on market capitalization size.
In WebBroker, I'm going to click on research and under market, I'm going to go indices and we will talk about the three main categories of market capitalization. I want to start off with the S&P 500.
This would be the most popular one here. And this one tracks the largest companies that trade on the US exchange and this will track large-cap companies.
In other words, it's tracking companies that are valued at $10 billion or more.
Now going back to… Just going back to indices here, the next market cap category will be mid-cap companies and that will be tracked under the S&P 400.
this attracts companies that are valued between 2 billion and $10 billion, so mid-cap companies.
investors who consider this may consider this because these companies may have the potential for rapid growth in whatever sector they are.
The final category we will look out will be the small-cap and that would be under the S and P 600. So this one tracks companies that are valued between $250 million and $2 billion. Now, this would be utilized by investors who have a more aggressive investing style, may have a longer time frame and that's because even though these companies may have a more aggressive growth potential, there's a lot more volatility involved.
Investors can look at any one of these indices to identify these different companies based on market capitalization side.
> Let's dig deeper now. Say an investor wants to filter through the mid-cap companies based on one specific sector or industry.
How do we go about doing that?
>> That's where the idea of screeners comes back into play. We talk about screeners a lot because it's a very powerful tool. Let's hop into WebBroker and I will show you how an investor because a specific market Size as well as sector may filter and find companies that fit that category. So in WebBroker, we will go research and this time under tools, we are going to go screeners.
So the screener tool allows you to looat different companies under categories that matter to you. Here we are filtering for stocks and we will go to screening here.
LI'm just going to declare the results we have right now and focus on specific criteria.
I will start off by looking at companies trading on a US exchange, so going to change this to US companies and then I'm going to add more criteria and the first option I will choose will be at market capitalization.
So you mentioned, grade, small-cap, or mid-cap, mid-cap companies are typically valued between 2 billion, so I will put my minimum at 2 billion, my maximum at 10 billion and so right then, it shows me that there is over a thousand companies that meet that criteria, still a lot of companies, so I want to add more.
This time, I will filter by sector and may be I want to filter by healthcare.
And so once I do that, the number has reduced significantly, there's 126 companies that I will add one more criteria here because as we mentioned, mid-cap companies may have potential for rapid growth so maybe as an investor you want to figure out what the earnings-per-share has been in the last five years, so let's add that. And in this instance, will say may be companies that have experienced some kind of growth in their earnings-per-share, at so now you're down to 23 companies.
An investor is able to filter through these mid-cap healthcareCompanies that have experiences some growth in earnings-per-share. I will not forget… As you always remind me, an investor can always save their screener so that they always have this available but this is how an investor can actually filter for these companies.
>> I want them to learn from my mistakes, Nugwa, because I've set up some killer screeners, such a great trainer, and then I go away from the page and didn't save it.
So if I can save one person the hassle, it's all worth it.
>> Always a timesaver.
>> Thanks for that, Nugwa.
Nugwa Haruna, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
And our reminder of how you get in touch with us.
Do you have a question about investing or what's driving the markets?
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All right, we are back with Peter Hodson, we are taking your questions on with American stocks.
Lots of questions coming in for you, Peter, let's get to them.
What is your look for gold?
>> So we kind of like gold right now and one thing that's interesting to me is that with the sectors and stocks, they are never on your timeframe and so last year when inflation was creeping up, everyone was saying, what's up with gold? Inflation is up so gold should be up.
Gold doesn't care what the timeframe is and so now it's a situation where interest rates are peeking, the US dolomite peak as well, now lo and behold, gold is 2% off its all-time high. So I think the sector is really under own right now. We are really positive in terms of the gold sector.
the scarcity of producers is a factor. So if you get any sort of wave of money chasing the sector when it hits new highs,investors are going to find there are fewer stocks to buy. The names they use to own in the last cycle, some of them don't even exist anymore because they've been taken over so we are pretty positive.
We are not gold bugs, but we just think that once rates peak and the US dollar peaks, culture do better.
>> Gold is about $2000 right now. People are probably asking the question and I'm asking myself too, can gold go much further than this?
You said is only 2% off its all-time highs.
>> I would never call any price on gold because it just acts as its own thing. You don't know what's going to happen in the future and it's always been a good hedge against problems.
If we go back to 2008, it was one of the only assets other than the US dollar that actually went up in value. So a lot of people don't like cool because it is in pay interest, or dividends and it's a pain to store but it's a negative correlator to the market so it can be very useful in a portfolio to diversify, but I just think people have to manage their own exposure. There's a lot of gold bugs that are all in gold and I don't think that's the right approach either.
> Let's go to another question now.
Lots coming in. We talked about Lightspeed.
Let's talk about the big one now.
Please comment on Shopify a near-term growth projection.
This is an interesting one considering what happened during the pandemic and after the pandemic.
>> Yes, and it's an interesting business case.
Shopify did what they needed to do for their long-term business which was to spend money on distribution, warehouses and so on to makesure their company could fulfil their orders like Amazon. It cost a lot of money.
it hurt their earnings. Investors were saying, hey, you're supposed to be this massive growth company and now you're spending this money and it is look so good.
But the proof will be in the pudding five years down the road if they maintain their global leadership position with Amazon and they maintain a duopoly in the non-China world.
We'll see what happens and I think they did the right move because if they didn't, the customers are going to go elsewhere and we know where they would've gone because there was a big competitor.
they're back on track. Investors have realized that this company is still growing, it's still a global player, it still has five or $6 billion in the bank.
And it might've done the right thing even though the medicine was hard to take. So we do like the company.
We like its prospects. Again, you need a better interest rate environment for tech stocks to really, really do well but we may not be far from that depending on what happens with inflation and I think it's one of the go to names for any of the managers in the Canada, is based on the index. People know the name, and when tech runs, people might start looking at it again. It's off its lows and if they can get back intoit ties, that could be interesting.
>> In the long term, perhaps they have set themselves up for success. In the short term, are all the check names getting pushed around by the market, the beds about when the Fed will start cutting?
>> It does. Investors these days are so focused on quarterly results as well so you can get a situation where company misses 1/4 and rates don't go downand investors might lose their heads over that because it won't be a very good scenario for that particular company. But I think again, as we were talking about earlier, things are slowly getting back to a more normalized scenario.
we will never get rid of the quarter to quarter traders, but people will start looking at the big picture and say, yeah, this is a company that may be around for the next 50 years so why am I worried about the next 90 days. That may be good for investors but it's difficult for a lot of people.
> Look at another question now, we have a viewer who wants your views on TC Energy. Another big story in the headlines right now. OPEC's actions and the resulting price action in crude.
>> Poured TC Energy. They have a lot of issues going on. One is that it's a dividend stock and with rates going up, you got GICs that are paying 5% and suddenly dividend stocks may not look as exciting as they used to it when rates were at 0% and the other thing is they are getting hit by inflation on the coastal pipeline and their estimates on the pipeline have gone from 8 billion to 10.9 billion and that's a pretty big jumpfor a project that supposed to be onstream I think it's early next year.
And so investors are saying, okay, well you got cost overruns, you've got potential problems and you got a dividend that is fine but not as fine as it used to be versus everything else and so I think it's going to be just flatlining for a period of time. I think it's a very, very solid company and it's one of the situations where price, it's all about volume. So they don't really worry about gas and oil pricing, just as long as the volume is there.
And despite the green movement and things like that, the pipelines are all full and we are going to have carbon for a long time before we don't have carbon and so I think the timeframe essentially don't have to worry about that but the cost overruns, that's a big fundamental change and investors are going to sit on the sidelines for a longer period of time.
>> Important things to keep in mind for TC Energy.
We'll get back your questions for Peter Hodson on North American stocks in just a moment.
As always, make sure you do your own research before you make any investment decisions and a reminder that you get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
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You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker.
Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
It's one of the big economic data plans we always keep eyes on as investors: US jobs report.
The March report will be coming at the end of this week. Of course, the Fed is looking for signs of a cooling labour market.
What might we get? Anthony Okolie is joining us now with TD Securities Outlook on the job stated. What we think?
>> Thanks very much.
This is a big one. TD Security says that although US payroll growth likely slowed relative to the January February period, TD Securities expects job growth into a stay at a steady pace. While payrolls are down from the record set back in 2021 after the lifting of COVID restrictions, as you can see,the three and six month moving average, the light green line issix months and dark line is three months. Payroll is sitting well above 300,000 by the end of February.
Now TD Securities expects the US to add another 270000 Jobs in March.
That's versus 240,000 consensus estimates.
Again, a slight slowdown from the stronger in January, February prints that we saw earlier this year but it also represents an above trend pays for job growth for the US. The unemployment rate, TD Securities things that is going to stay unchangedat 3.6% and TD Securities is also forecasting wage growth the common at a firm 0.3% month over month gain. Prior to the US jobs print which is coming out this Friday, we did get the jewel job open report in the US which fell below 10,000,004 in February for the first time in nearly 2 years.
Another sign that the US labour market is cooling.
This morning we got the US market payrolls which came in at hundred and 45000 Jobs in March, that is down versus what we saw in February, well below the 210,000 that was estimated by Wall Street, again providing a sign that perhaps the US economy is slowing. Now, one bright spot in the payrolls report was around wage growth which grew at a 6.
9% rate in March.
Again, that's down from the 7.2% we saw in February.
Again, that's a positive sign for the Fed, which is looking to tamp down on inflation ahead of the next meeting in May.
Of course, TD Securities expects the Fed to hike rates 25 basis points followed by another 25 Basis Point Hike in June which would bring the terminal rate to between five and 4:45 .5%. Greg?
>> Anthony, speaking of inflation, which is TD Securities think about that? Not only inflation but the overall health of the US economy.
>> On the economy, they still expect US economic growth to slow down during most of the year the below trend growth as the past Fed rate hikes continue to work their way through the economy, leading to a recession in the fourth quarter. Now to give their expectations for a recession later this year, they expect the Fed to start easing policy by the end of the year. Now, on the inflation front, TD Securities is forecasting inflation to slow to 3 1/2% by the fourth quarter with core CPI decelerating to a still high of 3.
7%.
now they also note that there are some risks to the economic projections for 2023, namely any new developments in the financial markets after the SVP collapse as well is another escalation in the Russian Ukraine conflict.
Greg?
> Interesting stuff as always.
Thanks.
>> My pleasure.
>> Moneytalk's Anthony Okolie.
Let's check in on the markets.
We will strong Bay Street, 112 points to the downside we will call that, a little more than half a percent.
Not really moving all that much during the lunchtime trading session.
We saw that big jump in the price of crude on the back of OPEC surprising us on the weekend with the production cut.
We saw some money move into the energy names.
A bit of a pause in the trade today, not only in benchmark room but some of the energy names that shot up in recent session. 2461 for Cenovus, you're down a modest 1.
8%.
I notice some of the mining names, Hudbay in particular getting a bid, he continues to get a bit.
At six bucks and nine cents per share, it's up a little more than 3 1/2%.
South of the border, we just heard from Anthony, as we look forward to jobs Friday and some indication that perhaps labour softening, what does the Fed do with it all, investors are working through it as well. A bit of a down day but nothing too dramatic, down about 23 points on the S&P 500, a little more than half percent.
On the tech side, there is a bit more weakness, a bit of risk coming out of the trades, 175 points to the downside, the NASDAQ down one and half percent.
The chipmakers are getting it today.
We should you Nvidia off the publisher.
You can't advance micro devices, and deed, down to the tune of about 4%.
We are back note Peter Hodson from 5i research, taking your questions. This one was in the headlines.
What do you think of REI TS right now?
Especially office real estate and was happening with the whole return to work?
> Sure.
It's pretty interesting because we are at a low.
Office vacancies are high.
It's still the COVID work from home is impacting things. But the question is, is if we do get into a recession and you actually get unemployment picking up,then office vacancies are going to be kind of ugly.
And of course, when office vacancies are that high, the rent roll over start. You start getting lower rents if you are signing leases.
I remember the 9192 real estate recession were companies going bankrupt left right and centre, almost on a weekly basis. We had shopping centres going bankrupt, interest rates were much higher. It could get ugly. So it's a situation where right now, investors are scared of what might happen. So the big question is a, does the work from home situation change? And B, do we actually see an uptick in unemployment which could impact office vacancies? I would be relatively cautious right now.
A lot of companies are sort of saying, companies are going to be okay and it looks okay looking at the numbers but itall depends on what happens going for words I would be a bit cautious on that sector right now because if we do get a deeper recession than expected, it's a sector that's going to continue to struggle.
>> Is the work from home versus the return to office the wildcard here? I have heard one theory, people love to spend things in different ways, this is sort of intriguing, saying, when labour was scarce, the market was tied to the people felt, the workers felt they had the power to say, I'm going to sit home. In a recession, I heard that this argument was sort of an intriguing one, it might motivate some people to show their face in the office, they might come back by virtue of their being a recession and times are tough.
>> That's very true. There are a lot of companies saying, you know what?
You can work one day a week from home, not four.
We are seeing that trend in terms of corporate announcements but we are not seeing it in office vacancies.
I think the corporations are still a little bit reluctant to add space because they are looking at the same things you and I are in terms of what could happen, and they are also looking at their future hiring expectations. And if they are worried about what's going to happen, they're not about to hire a thousand people as he talked about, they're laying off 10,000 people.
They are just not signing those seals.
So I think the trend towards getting back in the office will continue but it may not be enough to kind of override the trend that's happening right there.
>> For the viewer at home, we are clearly in an office tower right now, unless I thought maybe I had built this in my basement which would be impressive, but no, I have a TV at home. Nothing this impressive. We are at a time for question. We always love having you on the show. Any final thoughts in terms of volatility we have seen so far this year and when we might be able to sit back and look at the fundamentals and not worry about macros so much?
>> Yeah, I think once the Fed stops, when they do nothing, they have a meeting where they don't raise, they don't lower, that will be significant for investors.
I think first quarter earnings are going to be important and I think really investors need to remember it's a long term journey.
You're not buying this for this year.
If you are investing in stocks, you should have a longer-term timeframe then this year.
But unfortunately, the average holding time I think is nine months now with the stock.
We just find that ridiculous.
It should be 10 years as far as we are concerned.
You have to have that money compounding for you over time. You have to go through the recessions to end a positive at the end of the day.
I think everyone just needs to sit back and chillax a little bit.
[both laughing] >> Interesting times and always interesting to have a conversation with you.
>> Thank you.
>> Is always a home, do your own research before making an investment decision. Our thanks to Peter Hodson, founder and head of research at 5i Research, he has been our guest. We will be back tomorrow with the reaction to the Canadian Jobs Report as well some of our best interviews of the week. On Monday, Jim Kelleher, director of research at Argus Research will be our guest taking your questions about technology stocks. A reminder that you can get a head start this question, just email moneytalklive@td.com. That's all the time we have the show today. Thanks watching. We'll see you tomorrow.
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